8 Trends to Watch in the Cell and Gene Therapy Market

Originally published by our sister publication Specialty Pharmacy Continuum

An increase in rare/ultra-orphan treatments, along with a boom in cell and gene therapies and ambulatory infusion centers, are among developments to prepare for in the increasingly competitive specialty pharmacy market.

“Fifteen years ago, we were still figuring out specialty pharmacy itself and even a definition around it,” said Michael Baldzicki, the chief commercial officer at Polaris Specialty Pharmacy Services. “Now it’s become so multifaceted, not only in the supply chain but every aspect.”

One of the biggest factors affecting specialty pharmacy is the “ever-evolving” nature of insurance coverage, Mr. Baldzicki said. Employers are increasingly moving toward self-funded health plans to try to reduce costs, with 82% now using them. In 2023, the third-party administrator stop-loss insurance business reached $400 billion in the United States. By 2030, that is projected to reach $800 billion, he said. It’s due partly to the increasing market for high-cost drugs for rare and ultra-orphan diseases. In 2022, there were about 27 claims that cost more than $5 million each, he said. Some plans are using non-disclosure agreement locks for patient access to medications and step edits, or not covering specialty drugs and using alternative funding models.

Mr. Baldzicki cited several sources for statistics in his presentation, including IQVIA reports, the 2023 Trends in Specialty Benefit Design Report from PSG, the 2022 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers, and the 2020-2023 Key Trends in US Specialty Pharmacy and Access report from Certara.

The biggest categories of specialty products currently driving spending are oncology, immunology and neurology, he said, and specialty drugs make up 80% of the pipeline for new FDA approvals. Some of the segments within specialty he expects to evolve are in the infusion therapy market, health-system specialty pharmacies and digital health.

“Health systems and integrated delivery networks are the new payor, if you watch what they do partnering with different specialty pharmacy vendors and infusion providers,” Mr. Baldzicki said. For example, some health systems are reaching out to local employer groups to capture their infusion business.

He mentioned several other trends to watch:

1. Growth of “specialty lite” products. There is an increasing number of drugs stepping into the specialty pharmacy channel for which the price and complexity make them too expensive for traditional retail pharmacies and pharmacy benefit managers, although they do not qualify as full specialty products. These brands are expected to grow in the coming years as manufacturers leverage new technology to treat specific diseases.
2. Growth of high-cost therapies. The FDA approved 55 novel therapeutics in 2023. Oncology continues to accumulate the most approvals, followed by neurology, infectious diseases and hematology. “We’re going to see continued cost pressures around these types of drug launches in the life science sector,” Mr. Baldzicki said. Last year, the average drug expense for a patient with a rare disease was about $500,000 per year.
3. Plethora of first-in-class drugs. Twenty of 37 novel drugs approved in 2022 (54%) were considered first-in-class. With limited data outside of clinical trials, this makes things challenging for specialty pharma companies to plan out the patient journey and how to support patients, ensure they have access to products, and so on.

4. Expanding the patient population for specialty drugs. The rare disease and cell and gene therapy market is expected to include wider populations, with potentially thousands of patients eligible to receive these drugs. The National Bureau of Economic Research estimates that more than 1 million patients will receive treatment with gene therapies, costing more than $25 billion annually, by the end of 2034. As the pipeline matures, innovative therapies may target more diseases, such as Alzheimer’s disease or diabetes. The first eight gene therapies for rare genetic diseases approved by the FDA have a combined estimated eligible patient population approaching 18,000.
5. Growth of cell and gene therapies. There are 37 cell and gene therapies approved for the U.S. market, with 20 more expected by 2025 and more than 91 by 2031. The price tags for these therapies continue to increase. “That’s going to be about a $30 billion market,” Mr. Baldzicki said.
6. Explosion of ambulatory infusion centers. As more infused drugs are seeking approval to be included in medical benefits, and payors are instituting site of care policies to find the lowest cost setting for such infusions, ambulatory infusion centers are “really popping up everywhere,” Mr. Baldzicki said. Medical settings owned by private equity are building this capacity, and even ambulatory surgery centers are acquiring small specialty pharmacies to gain access to drugs and driving site of care policies in particular therapeutic areas to save on costs. Health systems are integrating their own ambulatory settings for infused drugs. There also has been an increase in gold bagging, in which a health-system specialty pharmacy coordinates all healthcare points, from prescribing through dispensing and administering the therapy.

7. Continued movement to more holistic patient care. Look for more lifestyle and behavioral/mental health components, in addition to social determinants of health, to be incorporated into personalized healthcare plans for patients.
8. Manufacturers growing comfortable with direct, exclusive or limited distribution models. “We’re seeing a huge shift in network abrasion,” Mr. Baldzicki said. Life sciences companies are opting more to contract with independent pharmacies versus a bigger network.

The presentation contained a good collection of trends, commented Courtney Rice, principal with Acadia Strategy Partners, a rare disease and gene therapy consulting firm.

“Employer-sponsored plans are going to lead the way on putting their foot down in terms of pricing and value for rare and cell and gene therapies,” said Ms. Rice, who was in the audience. “I don’t think manufacturers fully understand the self-funded market very well or understand the tools employers have at their disposal to control benefits.”